You have a bond at par value with a coupon of 7% maturing in 10 years....
You have a bond at par value with a coupon of 7% maturing in 10
years. Coupons are paid annually. The new
bonds of similar credit worthiness are now paying a 7.5% coupon.
What is the new value of the bond.
Homework Answers
As 7% coupon bond is trading at par, so YTM = 7%
So,
Calculating New Bond Price,
Using TVM Calculation,
PV = [FV = 1,000, PMT = 75, N = 10, I = 0.07]
PV = $1,035.12
Bond Price = $1,035.12
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